A good lease agreement with adequate supplemental documentation should cover a variety of issues that arise in property management. Having specific lease clauses that pertain to important issues can help avoid problems.

In our opinion, yes, your lease agreement should have included a clause that prohibits a tenant from subleasing any part of the rental premise or assigning his lease agreement without prior written consent of the landlord. This language in your lease agreement provides you some flexibility to approve or disallow any potential subleasing or assignment. A lease clause prohibiting lease transfers without written consent of the landlord also establishes a material condition of the lease. If a tenant transfers his lease through subleasing or assignment without the landlord’s consent, the tenant has committed a breach of his lease. The landlord could consider this breach as grounds for eviction or for a lawsuit due against the original tenant because of losses caused by the replacement tenant.

An inadequate lease might give the landlord absolutely no control or options. Many states will not allow a landlord to outright prohibit either or both methods of lease transfer, but a landlord can almost always have reasonable requirements for approval. For example, the landlord can usually require the new tenant to meet the same qualifications as the old tenant. This might include screening (e.g., ID verification, credit report, criminal checks, etc.) and specific financial requirements. Whether one can force the assignee tenant to accept different terms would depend upon (1) terms of the lease agreement, (2) issues related to the nature of the business, (3) qualifications of the new tenant, and (4) possible other factors.

Your tenant may be able to sublease his place. In many states a tenant may sublease or assign his lease if not prohibited by the lease agreement. Some states’ statutes specifically prohibit subleasing or assignment without permission of the landlord. Many states prohibit the landlord from “unreasonably” refusing to allow a sublease or assignment – for example, not allowing a replacement tenant who is qualified in the same manner as was the original tenant.

Even if covered in some way by statute and especially if not, your lease agreement should cover the issue in detail and as strictly as allowed by law.

In no case can a landlord discriminate against any protected class regarding a replacement tenant, whether the replacement is done by assignment, sublease, or new lease.

There can be important differences between a sublease and an assignment, depending on state law and/or on the particular clauses in a specific document, that might make a landlord prefer one over the other if the landlord has a choice, but, if done without the landlord’s permission, even without his prior knowledge, either procedure can result in problems for the landlord

When a tenant wants to leave before the expiration of his lease and asks the landlord to agree to a substitute tenant to take his place, the landlord’s options may depend upon (1) state statutes, (2) the legal obligations under the lease agreement, and (3) the details of the proposed arrangement.

In general, you could allow a lease transfer conditional upon the proposed replacement tenant qualifying under your standard qualification and screening practices.

Most often, depending upon the circumstances, it may be a better business practice for you to consider creating a new tenancy with the proposed substitute tenant. You would need to terminate the original tenant’s lease agreement conditioned on the substitute tenant’s qualification and acceptance under your tenant screening and selection standards. At termination of the original lease agreement, you and the substituted tenant would create a new tenancy in accordance with your established policies and procedures for new tenants. This would provide a clear and direct relationship between you and the new tenant.

The same screening standards used to evaluate any rental applicant, such as financial stability, credit history, employment, references, or other criteria must be used to evaluate a proposed substitute tenant. If the proposed new tenant fails to qualify under your rental standards, you are not obligated to offer tenancy under a new lease or transfer options. To help reduce potential claims of discrimination, there should be written documentation of the screening and qualification process and the business justified reason for the rejection.

Lease agreements may instead be transferred through a subleasing agreement or through an assignment of lease. Some states have landlord-tenant statutes prohibiting subleasing unless agreeable to the landlord, while other states do not address the issue and leave the decision of subleasing to the landlord. Many lease agreements contain language that prohibits assigning the lease to someone new or subleasing the unit on a short-term basis without the landlord’s express, written consent.

In many states a landlord may not unreasonably withhold consent to a transfer of the lease agreement through subleasing or assignment despite any lease language to the contrary.

If the landlord is willing to work with the original tenant on a conditional basis pending screening and approval of the substitute tenant, a transfer of the lease agreement could be accomplished by a sublease or by an assignment of the existing lease.

For many landlords, outsourcing a job is the more efficient way to produce the desired work result, particularly when the work should be/must be done according to licensure and code standards. Most often this is the case for extensive property repair or remodeling work. A landlord may need to select a general contractor for a major remodeling project or a specific skilled trade contractor, such as an electrician or plumber, for specific tasks.

Without first-hand knowledge of a tradesperson’s skills or a trusted referral, it may be difficult for a landlord to determine the qualifications of the would-be hire? The task may be more difficult as a landlord must assess the risk as presented by the individual regarding quality of work, on-time completion, contractual authorities and responsibilities, financial stability, professional standing with state boards, and general reputation within the community.

Selection of a qualified independent contractor can require a certain amount of time and energy. However, if you have used a builder, remodeler, architect, engineer, or design firm for past work, you can contact them to determine if they would be interested in your project. If not, ask them if they can recommend a contractor or contractors for your area and the type of work you want done.

Asking for contractor referrals from people you know can be the easiest and best source of referrals. Word of mouth recommendations from family members, friends, co-workers, and business associates who have utilized a contractor for a similar project and were well satisfied with the results can make the hiring decision much easier.

Absent a referral, you will need to conduct your own research. You may want to:

• Contact the local home builders association or remodelers council in your area for a list of member contractors and their trades.
• Check other sources such as Yellow Pages, local advertising, or do online searches for the contractor specialty you will need.
• Identify several candidates and check with the state licensing agency, local Better Business Bureau, or online for ratings, reviews or complaints about the company and/or the individual contractor.
• Interview candidates, verify credentials for current licensure and/or registration, check references, and verify proof of insurance and bonding.
• Obtain written estimates from contractors that meet your requirements for skills and experience.
• Review estimates for scope of work, project timeline, payment schedule and permit requirements.

Most landlords probably use unlicensed contractors more often than they use licensed contractors, primarily because they’re usually cheaper, at least when getting bids.

You should understand the licensing requirements of your state to give you some idea of the value to put on the license and, of course, to know if you are required by law to use a licensed contractor for the particular work being considered.

There is probably nothing inherently wrong with using unlicensed vendors for many routine non-critical tasks that do not require a license by law or a license in order to pull a required permit as long as you are aware of the risks and take the necessary precautions to protect yourself.

Many states both define which tasks must be performed by licensed contractors and set maximum dollar limits for which a license is not required no matter what the type of work.

Certain advantages of using licensed contractors often outweigh the usual disadvantage of cost. Furthermore, an initially perceived lower cost with an unlicensed vendor sometimes turns out to not be lower after all because the unlicensed vendor may be less qualified to do good work, or even safe work.

Although not every item applies in every state, the advantages of using licensed contractors usually include the following:

• Procedures for filing complaints, with penalties of license suspension when the licensee is found in violation of laws and regulations,
• Assistance to consumers in resolving conflicts with the licensed contractor,
• Access to a state Recovery Fund in the event of poor work done by the licensed contractor,
• Allowing litigation against the licensed contractor, while a consumer’s right to sue an unlicensed vendor is restricted in some jurisdictions,
• Licensees are often required by the state to be bonded,
• Licensees are required to carry liability insurance,
• Licensees are required to obtain necessary permits.
• Licensees are required to carry workers’ compensation insurance for employees and for sub-contractors that don’t have they it for their employees,
• Licensees are required to obtain applicable permits (unlicensed venders will not be able to even pull a permit in many jurisdictions), and/or
• Licensees are required to do the work per building codes.

In many states, a contractor cannot file a mechanic’s lien against your property, or, in some states, even sue you if he performed work that requires a license unless properly licensed. Other than this unique circumstance and the fact that unlicensed work is often cheaper than licensed work, a licensed contractor should usually be preferred over an unlicensed vendor.

The basic rule before starting any project is to define and analyze the project. Obviously the type and size of the project, the requirements of the state and county or city building standards and codes, and resource availability will be major considerations.

Even if you have the skills required for a particular task, there are two potential issues:

First, you need to ask yourself whether it is the best use of your time, or if you should instead invest that same time in another more important aspect of managing your investment.

Second, most states have laws requiring that certain tasks be performed only by licensed contractors. While a state’s laws may allow property owners to perform some of these tasks for their own properties, the exemption may not apply to rental units and some municipalities may have more stringent restrictions than the state. You will need to research the licensing laws and the requirements for obtaining permits for the location of your property.

Doing it yourself usually has the following advantages:

The work may be performed sooner, perhaps reducing the impact of the problem on the current tenant or the vacancy period. This assumes you have the experience or talent to do the work quickly.

You may save money. Whether you really do and how much might be saved depends on the value you  put on your time, on having the experience and/or talent to adequately perform the work, and having adequate insurance coverages for damages or injuries resulting from your actions.

You may not be liable for another’s actions. This assumes you don’t have any assistance at all from anyone else, whether specialty subcontractors or employees.

Doing it yourself can have the following disadvantages:

You will need to learn how to do the work if you’ve never done the particular task before.

You may need to spend a lot of time on the work if not experienced at the particular task(s).

Winterizing your rental property before cold weather conditions set in can help protect your property and benefit your tenants.

Winterization tasks will differ depending upon the location of the rental property, the age of the property and the property’s condition. The following winterization tips are some of the protective measures that a landlord can take to prepare a property for cold weather season.

Exterior Weatherization

Gutters and Roof

• Clean the roof to remove accumulation of dirt, debris and leaves.
• Inspect the roof for areas where missing, warped, loose, or damaged shingles need replacement.
• Inspect the condition of metal flashing in valleys and around vent pipes.
• Check to see that gutters and downspouts are securely fastened.
• Clear debris from gutters and downspouts.
• Inspect gutters and downspouts for leaks or damage.
• Check the extension of the downspouts to ensure that runoff water flows away from the foundation.

Chimney

• Inspect chimney for loose bricks, deteriorated mortar, cracks, and moisture damage.
• Inspect chimney for obstructions such as debris or bird nests that must be removed.
• Check that screening and protective cap are in place to prevent future problems.

Exposed Foundation

• Check the slope of the dirt grade around the building to make sure water drains away from the foundation.
• Inspect the foundation for damaged block, bricks, or mortar that need replacement.
• Inspect the foundation for cracks or holes that need repair with insulating foam or caulk.
• Inspect foundation at entry point for pipes or wires for damage or leaks that should be repaired or sealed.
• Rake leaves or other debris away from the foundation.
• Check basement window wells for damage to window or foundation. Clean debris from window well and install window shields as necessary.

Basements and Crawlspaces

• Inspect basements and crawlspaces for damage and pest infestations.
• Add additional insulation to seal air leaks.
• Waterproof or seal surfaces to prevent moisture damage.

Sheds and Attached Garages

• Inspect for obvious damage or drainage problems.
• Secure and weatherproof windows and doors.

Woodpiles

• Wood for fireplaces and wood stoves should be kept away from the house and foundation.
• Inspect woodpile for pest infestation and animal habitats.
• Wood should be stacked and covered with a moisture barrier or tarp.

Air Conditioning Units

• Clean dirt, debris, and leaves from central air units.
• Cover unit with a protective barrier or wrapping to seal unit from weather damage due to snow and ice.
• Remove window air conditioner unit and clean in preparation for storage.

Landscape, Trees, and Shrubs

• Trim tree branches back from house, outbuildings or electrical wires to protect from damage caused by snow, ice, or high winds.
• Prune shrubs to prevent ice and snow damage.

Outdoor Water Faucets, Irrigation Systems, and Hose Connections

• Drain irrigation systems to prevent damage.
• Disconnect, drain, and store garden hoses.
• Drain and turn off shut-off valve inside the house.
• Drain, cover, and insulate outdoor faucets.

Exterior Lighting

• Inspect outdoor lighting for damage or burnt-out bulbs.

Common Areas in Multi-Family Housing

• Inspect and maintain common areas to winter condition standards – i.e., salt, sand, ice-melt treatments; walkways, driveways, and parking areas cleared of ice and snow to protect tenant safety from slip and fall hazards.

Interior Weatherization

Attic Space

• Inspect for water stains, mildew, and rot.
• Check attic insulation for moisture damage.
• Check that depth of insulation appears sufficient to prevent ice damming on roof.
• Inspect attic vents for obstructions.

Furnaces and Ductwork

• Test furnace to make sure furnace operates correctly through a full cycle of heating.
• As needed schedule professional inspection and cleaning of furnace and ductwork.
• Inspect ductwork for damage or loose connections requiring repair or replacement.
• Clean dust and dirt from ductwork.
• Inspect ductwork for evidence of pests and indications of moisture problems such as mold.
• Check to see that insulation around ductwork is in good condition. Add additional insulation as needed.
• Ductwork in unheated areas should be insulated.
• Replace furnace filters for better indoor air quality and furnace efficiency.
• Check the thermostat to make sure it works properly.
• For better efficiency, replace old thermostats with programmable models.

Windows and Doors

• Inspect window and door frames for damage and decay.
• Check caulking and weather stripping around windows and doorframes for leaks, or signs of wear.
• Seal air leaks around windows and doors with weather stripping, draft guards, and gasket sealing thresholds.
• Inspect windows for cracks or broken glass. Replace as needed.
• Install storm doors and windows.
• Consider using weather proofing plastic sheeting to cover large window areas to reduce drafts and heat loss.

Fireplaces and Wood Stoves

• Inspect the chimney and flue for damage or creosote buildup.
• Check the fireplace or wood stove to ensure it operates properly.
• Check all connections to make sure they are secure and undamaged.
• The damper should be closed whenever the fireplace or stove is not in use.

Hot Water Heaters

• Check temperature settings and adjust as needed.
• Check for signs of leaks and rust.
• Check that the drain for an under-tank pan is clear of blockage.
• Check pressure relief valve to make sure it is in good working order.
• If required, flush water heater tank to remove sediment.
• Cover with blanket insulation or cover per manufacturer’s instructions.

Plumbing

• Inspect for un-insulated pipes exposed to an outside wall and wrap them with foam sleeves.
• Inspect for leaky or dripping faucets.
• Check under kitchen sink or bathroom sink cabinets for leaks or signs of previous damage.

Fire Extinguishers, Smoke Detectors, and Carbon Monoxide Alarms

• Test fire extinguishers, smoke detectors, and carbon monoxide alarms to ensure alarms are in good working condition.
• For battery operated alarms, install fresh batteries.

Other Tips

A winter season newsletter sent to tenants can provide some energy saving tips to help with tenant comfort and possibly reduce heating and overall energy costs. As examples, tenants should:

• Inspect for blocked or closed vents in living spaces. A supply vent could be blocked by furniture placed over or against the vent.
• Open any register vents or air returns inside the living spaces in the house. Vents may be wall mounted, in the floor or in the ceiling.
• Notify landlord that repair or replacement of damaged or loose vents is needed.

• Reverse the direction of ceiling fans to rotate clockwise to help circulate warm air that gathers near the ceiling. This will push the warm air down to lower areas.
• Keep the kitchen sink and bathroom vanity cabinet doors open so warmer air can circulate around pipes to prevent pipes from freezing.
• Help reduce cold air drafts from entering living spaces by putting towels or other materials along bottoms of exterior doors and keeping windows shut and locked.
• Avoid using unventilated and unattended space heaters.
• Never using cooking stoves to heat living spaces.
• Test smoke alarms and carbon monoxide detectors regularly and never remove alarm batteries.
• Do not turn off the heat at the property when leaving for holidays or taking a vacation during expected cold periods.
• Notify the landlord if an extended absence is planned, such as an out of town trip or holiday travel.

Many of the above inspections and repairs are done as a matter of course throughout the year as part of regularly scheduled property inspections and upkeep. Winterizing the property provides additional protections to keep the property in good condition and safe and habitable for the tenants.

As a reminder, landlords must comply with applicable landlord-tenant statutes regarding “right of entry” to the rental property, giving legal notice to tenant for any type of entry for health, safety, or maintenance purposes. Landlords must not abuse the tenant’s legal rights to quiet enjoyment of the rental property by unnecessary or harassing behaviors regarding property inspections for any reason.

Insurance premiums can be a significant cost of property ownership, but insufficient insurance can result in financial disaster.  The location, type, age, and construction quality of the subject property are the important factors in determining premium costs.

An experienced insurance agent can help a landlord decide the most important types of coverages, how high a deductible is acceptable to the landlord, and how large the policies should be. The overall net worth of the landlord may help determine the amount of liability coverage that is prudent.  Each landlord must evaluate risks on a regular basis to help determine the potential property damage risks and the possible liability for injury or financial loss to others, then try to carry the appropriate insurance to deal with them.

The best way to minimize insurance costs is to provide only those coverages needed and to shop for the best premium for those coverages. However, when deciding which coverages are needed, it is important that a landlord not delete any important ones just to save a few dollars.

One of the primary ways and the least risky way to reduce premiums for hazard coverage is to increase the deductible. The maximum deductible that a landlord would want to consider depends on his risk tolerance; his financial condition, and for financed properties, the maximum amount allowed by a lender.

When purchasing insurance, a landlord must consider the available limits and deductibles by which he can help reduce his insurances costs while maintain adequate coverage for his business.

• Decide what perils to insure against and determine how much loss one might suffer from each.
• Cover the larger loss exposures first – Liability coverages should be at top of the list.
• Use as high a deductible as one can afford.
• Avoid duplication of coverages. Even if a landlord has several policies on a property one can still collect only the amount of the actual loss. All the insurers share the payment proportionately.
• Utilize package policies whenever possible.
• Periodically review insurance program to ensure that coverage is adequate and that premiums are as low as possible while providing adequate protection.

A landlord should consider insurance as a safety net for catastrophic events rather than making ownership risk free. Since an uninsured loss will be tax deductible, a loss equal to or less than the deductible amount will really cost a landlord the difference between the loss amount and the tax deduction resulting from that amount.

In many areas of the country, utility costs have increased at a much faster rate than rents. For those landlords paying for water, electricity, and gas, the costs of utilities usually represent the largest non-mortgage expense. Reducing utility costs is an important matter in property operations.

There are two basic approaches that a landlord can take to help control utility/energy costs:

• Implement conservation procedures, and
• Transfer costs to tenants.

Some of the ways to reduce utility costs include the following:

• Install tamperproof low-flow showerheads and faucet aerators.
• Rebuild leaking toilets, replacing large tanked toilets (Can reduce water costs by thousands of dollars for large apartment complexes where owner pays for water). Adequately monitor units for water leakage in toilets, sinks, tubs, showers, and laundry facilities whether water is paid for by tenants or owner. In addition to saving on the cost of water for tenants and/or owner, adequate monitoring can minimize the risk of damages to sink cabinets, flooring, and wall bases.
• Prevent the use of common area water for washing vehicles or other activities on paved areas to help keep the landlord’s water costs down. Replace outside faucets with caps or install locking faucets to eliminate use of water for washing vehicles and paved areas.
• Where the owner pays for heat in complexes having central heating, a new boiler and insulated piping can save hundreds a year, even thousands for large complexes.
• Have common area lighting on only when actually necessary via timers, motion sensors, and/or photo cells can result in significant savings. Install mechanical or electronic timer or motion sensor switches in laundry rooms to avoid lights left on for long periods when rooms are not occupied.
• Where possible, convert from house water, gas, and electric meters to individually metered units. Where not mechanically cost effective to convert to separate metering, allocate costs among units using a fair and legally acceptable allocation method.
• Install non-carbon energy systems such as solar water heating.

The cost of separate water, gas, and electric meters being installed by a utility service provider depends on both location of the property and how the property is plumbed. The cost of the meters themselves and the cost of necessary modifications can vary substantially depending on how the building is plumbed and wired.

Many landlords try to minimize expenses to the extent that they end up being penny wise and pound foolish. Rather than minimize expenses, a better approach is to control expenses in order to maximize profit. Of interest to most landlords are ways to control expenses for maintenance and repairs.

Controlling expenses rather than minimizing expenses is a particularly important differentiation when it comes to maintenance. Minimizing expenses can often result in lower net operating income. This can occur for a number of reasons, including the following:

Bad Repairs – Using the lowest price vendor is not necessarily cost effective in the long run. It is usually more costly to do a repair over than to have done it right in the first place. Additionally, the need for a vendor to return or to have a new vendor fix the previous vendor’s mistake wastes landlord time and irritates the tenant.

Cosmetic Defects – Rough drywall or plaster patches that don’t match existing texture, bad paint jobs with paint on switch and outlet plates and door knobs, and other unsightly repairs and maintenance are noticed by the type of tenant that a landlord would like to have in his unit. Tenants who don’t care about such appearances are more likely not to care about how they treat the property.

Failure to Repair – Failure to repair in a timely manner can be most costly of all. As an example, a slow leak from an under-sink supply valve can ultimately result in the need for expensive cabinet repairs or even replacement of the cabinet.

Failure to take care of repairs, particularly those related to health and safety, can result in withholding of rent, a government inspection, and/or citations with fines. There is high probability that such an inspection will result in a number of other items needing attention besides the one the tenant complained about.

When trees are located near property lines with neighboring properties, property owners must be aware of risks associated with their trees and take steps to minimize those risks.

If you’re paying any attention to your property you may know in advance that there are trees or limbs of trees on a neighboring property that represent a potential risk to your property or vice versa. If you notice a tree on your property that represents a potential risk of damage to a neighboring property, you should take the necessary steps to eliminate or at least minimize the risk.

If you hire someone to remove or trim the tree, be sure that the person is properly licensed and adequately insured in case the work results in damage or injury related to the work, both regarding the neighboring property and your own.

If you recognize a potential risk of a neighbor’s tree falling or dropping a limb on your property that might result in damage to your property you might consider taking preventive action before your roof or the entire dwelling or an outbuilding such as a detached garage is damaged or destroyed.

If you and the neighboring property owner are on friendly terms you can simply discuss the matter with him and possibly arrive at a mutually acceptable resolution. If you and the neighbor are not on friendly terms or if a casual approach is not successful you can prepare for possible legal actions by writing a letter to the owner of the neighboring property